The Payback Period Rule

question 70

Multiple Choice

The payback period rule:

• A) determines a cutoff point so that all projects accepted by the NPV rule will be accepted by
• the payback period rule.
• B) determines a cutoff point so that depreciation is just equal to positive cash flows in the
• payback year.
• C) requires an arbitrary choice of a cutoff point.
• D) varies the cutoff point with the interest rate.
• E) requires two cut-off points to control cash flows in each period.

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